“‘We assumed.. in the second half that the consumer would get somewhat stronger” but “that is not the case,” Walgreens CEO Tim Wentworth told CNBC. 

He added that “the consumer is absolutely stunned by the absolute prices of things, and the fact that some of them may not be inflating doesn’t actually change their resistance to the current pricing. So we’ve had to get really keen, particularly in discretionary things.” 

Still, Walgreens topped revenue estimates for the quarter on strong performance in its health-care segment. The company views that business division as critical to its ongoing push to transform from a major drugstore chain into a large health-care company. 

The results come as Walgreens works to slash costs after a rocky last year marked by low pharmacy reimbursement rates, weakening demand for Covid products and a challenging macroeconomic environment. 

The company on Friday said it is simplifying its U.S. health-care portfolio and finalizing plans to close underperforming U.S. stores over multiple years, among other ongoing cost-cutting efforts. 

“75% of our stores drive 100% of our profitability today,” Wentworth said. “What that means is the others we take a hard look at, we are going to finalize a number that we will close…”

Here’s what Walgreens reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: 63 cents adjusted vs. 68 cents expected
• Revenue: $36.4 billion vs. $35.94 billion expected

Walgreens booked sales of $36.4 billion for the quarter, up 2.6% from the same period a year ago. 

The company reported a net income of $344 million, or 40 cents per share, for the quarter. That compares with a net income of $118 million, or 14 cents per share, for the same period a year ago.

Excluding certain items, adjusted earnings were 63 cents per share for the quarter. 

Walgreens did not provide a new revenue forecast for the fiscal year. The company has not offered that guidance since October, when it said it expected $141 billion to $145 billion in sales. 

Walgreens reported growth across its three business divisions in the fiscal third quarter. But the company’s U.S. health-care unit stood out, as sales jumped 7.6% compared with the same period a year ago. 

Revenue for the segment came in at $2.13 billion. Analysts had expected sales of $2.08 billion, according to estimates compiled by FactSet. 

The company said the higher sales reflect primary care provider VillageMD and specialty pharmacy company, Shields Health Solutions. Shields saw sales jump 24% during the period, driven by growth within existing partnerships.

Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution requirements, often for patients with complex conditions such as cancer and rheumatoid arthritis.

Those results come one quarter after Walgreens posted a steep net loss as it recorded a hefty nearly $6 billion charge related to the decline in value of its investment in VillageMD. The company now plans to shutter 160 VillageMD clinics, executives announced during the company’s fiscal second-quarter earnings call in March. 

“We are working with their management team to ultimately still be an investor, but meaningfully reduce our investment as well as gain some liquidity so that we can invest back in the retail pharmacy business that represents our future,” Wentworth told CNBC of the company’s investment in VillageMD.

Walgreens’ U.S. retail pharmacy segment generated $28.5 billion in sales in the fiscal third quarter, an increase of 2.3% from the same period last year. Analysts had expected sales of $28.34 billion, according to estimates compiled by FactSet. 

That segment operates more than 8,000 drugstores across the U.S., which sell prescription and nonprescription drugs as well as health and wellness, beauty, personal care, and food products.  

The company said that sales growth came entirely from comparable pharmacy sales and was partially offset by a decline in retail revenue.

Walgreens said pharmacy sales for the quarter rose 4.4% and comparable pharmacy sales increased 5.7% compared to the year-earlier period due to price inflation in brand medications and prescription growth. 

Total prescriptions filled in the quarter including vaccines totaled 306.4 million, a 0.5% increase from the same period a year ago. 

Retail sales for the quarter fell 4% from the prior-year quarter, and comparable retail sales declined 2.3%. The company pointed to a “challenging” retail environment, among other factors. 

Walgreens’ international segment, which operates more than 3,000 retail stores abroad, posted $5.73 billion in sales in the fiscal third quarter. That’s an increase of 2.8% from the year-ago period.

The company said sales from its U.K.-based drugstore chain, Boots, grew 1.6%.

Walgreens reportedly scrapped plans for a potential initial public offering of the subsidiary and is in informal talks with potential buyers, including private equity firms, Bloomberg News reported earlier this month.

But Wentworth said Walgreens has no plans to sell the chain.

“Right now, there’s no question Boots is a major contributor to us,” he told CNBC.

— CNBC’s Bertha Coombs contributed to this report.